Observations on meeting Bill Gates

I am pleased to have been invited to a small group session in New York City to meet Gates and hear him present his new letter. My observations are these:

1. Gates has a command of data and analytics in development economics better than that of most development economists, or for that matter aid professionals. He also expects everyone at the meeting to know everything about what he is talking about, or at least is willing to proceed on that basis. That said, when it comes to answering questions he sometimes assumes a stupider version of the question than what is actually being asked.

2. He is smart enough, and health-savvy enough, not to waste time with handshakes at the beginning of meetings. People as productive as Gates should not be required to shake hands, and the same can be said for people less productive than Gates.

3. He does not go on and on. His opening remarks were about two minutes long, with no notes, and all of his answers were to the point.

4. We were served water, at exactly the right cool temperature, yet without ice cubes. No cookies.

5. Unlike Gates, I am not convinced that “health” is the key breakthrough area for economic development, but there is enough low-hanging fruit out there that it doesn’t have to be. That said, when questioned on this his answers were closer to tautology than they needed to be. Much of their emphasis on measurement seemed to me to track absolute movement toward goals, rather than relative efficacies of different project investments.

6. Gates suggested that if he had been more careful tracking and organizing his AP credits, he might have been able to receive his undergraduate degree. That is one sense, in his words, in which he is barely a college drop out. In another sense, it makes him a very extreme college drop out.

7. He mentioned that he is an extremely eager consumer (and not just funder) of on-line education and The Teaching Company. And this is a man who could receive free (or paid) lectures from almost anyone he wants.

8. Empellon Tacqueria, in the West Village, has an excellent mackerel ceviche and I recommend also the quail eggs.

9. I have now run into Reihan Salam twice in the last two years, in random public places in Manhattan, without any reason for expecting to see him there. This should cause me to revise my prior on something or other, but I am not sure what. When changing/surfing the channels, which I do occasionally to “keep in touch,” I also run into him on TV a lot.

10. Gates understands the very high returns from better governance, but also sees it is not trivial to reap them.

11. In the context of U.S. education, he does not worry that teacher cheating will bias test results very much at the macro level.

12. He is more optimistic about charter schools than I am (though I favor them), and more optimistic about the results from giving teachers feedback about their performance. In my view, bad teachers don’t very much want to improve and it is not so much a matter of knowledge. Undergraduate college teachers are evaluated all the time, and it does help, but it hardly brings the rotten apples up to par and I don’t see it as the key to moving the system forward at lower levels.

I once asked Bill Gates why they changed the command prompt in one of his OS’s to ‘?’ instead of ‘OK’. He gave a solid 45 second explanation which made him a hero to me for a long time.

prior_approvalFebruary 1, 2013 at 8:51 am

‘…changed the command prompt in one of his OS’s to ‘?’ instead of ‘OK’. He gave a solid 45 second explanation which made him a hero to me for a long time.’

Well, if monopolists are one’s heroes, that is. I can’t imagine any of Gates’s actions in the last3 decades not being directly related to maintaining the his reaped profits. Just like Rockefeller.

Though unlike Rockefeller, the current winners in the Internet world, such as Google or Amazon, avoid Gates (and Apple) like the plague in their own operations. And in the real world, from main frames to cell phones, Linux has won – thanks to the clever use of copyleft to ensure that copyright followed its constitutional course, to increase the public domain for all.

Stallman was on the ball before Gates even realized what was going on.

Albert, if you honestly think that, put ubuntu or mint on a USB and try it out. In terms of user interface, Ubuntu is more similar to Windows 7 than Windows 8 is similar to Windows 7. Linux today is much different than linux 10 years ago.

Andrew'February 1, 2013 at 9:18 am

I think the Android Tablet is nearly the holy grail. However, it’s taken 3 decades to get close to this holy grail which approximates windows. Did Gates use the government to protect his monopoly inequitably (as in, using things other than copyright which is available to all)?

dan1111February 1, 2013 at 9:37 am

@Andrew’, I don’t think so. At least, that’s not the primary story. Gates was a business genius in that he was one of the first to see that a business could exist selling only software. Microsoft licensed early versions of its OS to any hardware maker who wanted it, causing it to gain massive market share in inexpensive computers. This head start was hard to overcome, because interoperability and available software are so integral to the usefulness of a computer. In addition, an operating system is an extraordinarily complex piece of software, making the barrier of entry high for a new company.

Microsoft may have used some not-nice techniques to maintain market share (they have been accused of things like trying to prevent computer makers from selling other OSes, intentionally not following standards, making file formats that are hard for competitors to open, etc.) , but I don’t know of any accusation that they “used” government. If anything, the government went on a misguided anti-trust adventure, trying to prosecute them for bundling Internet Explorer with Windows for free.

Dan WeberFebruary 1, 2013 at 11:01 am

Unfortunately Ubuntu keeps on destroying all their good stuff. Unity is a huge step backwards: I can no longer rely on being able to type in a window I move my mouse to instantly, or even in the transition of focus between windows.

And before you say “well you can install your own window manager” just stop and realize no one wants to deal with that crap.

It’s always been a toss-up whether my browser and my music player will both be able to play sound, again because the community keeps on re-inventing the music driver wheel.

I use Linux daily and have for closing in on 20 years because it’s great for so many things I do, but it’s not right for a lot of people.

JeffFebruary 1, 2013 at 12:54 pm

Ubuntu is indeed far better than it used to be, although it took them too long to get there. I suppose we can say that Apple copied the idea of Windows from the Xerox PARC guys, Microsoft copied it from Apple, and Ubuntu from Microsoft.

Peter SchaefferFebruary 1, 2013 at 2:36 pm

AM,

“Linux is terrible for what most people use computers for”

It’s actually rather good. For the record I use Windows (7), but Ubuntu is mine. I have it running on many of my other computers.

Could I use it full time. Sure.

Useful anecdote. A few years ago, I banned my daughter from my computer. She sat down and started to use my Ubuntu machine. She didn’t appear to recognize any material difference. She is not a hard core tech person. That may make her experience even more germane.

prior_approvalFebruary 1, 2013 at 10:36 am

‘Linux is terrible for what most people use computers for.’

So, you have never used either an Android smart phone, Amazon and/or Google, or most of the current telecommunications infrasture on the face of the globe? Because they are all using Linux at this point. The only people still using Windows are the shrinking number of users still forced to use PCs – a market which is no longer growing, by the way.

I didn’t know that the Google search box is actually a command line / terminal!

derekFebruary 1, 2013 at 11:02 am

And linux came on the scene and was used because Windows was terrible at what some people needed computers to do, a cheap reliable server platform.

By the way, have you seen Windows 8 or know of anyone who has? I know many people who are using a version of Linux (android) or a variant of the BSD Unix (Apple).

CliffFebruary 1, 2013 at 9:57 am

Ah, so even the most philanthropic and generous businessman is a devil in your eyes. I guess he just wasn’t donating to the government of Germany, so he must be a bad guy. How dare someone make products people want, make a profit, and then give that profit away to the tune of tens of billions of dollars. What a selfish guy.

Andrew'February 1, 2013 at 10:12 am

I can be jealous that he found that once-in-a-generation business opportunity. But, he found it, and I couldn’t have exploited it anyway.

prior_approvalFebruary 1, 2013 at 10:30 am

And yet, Stallman found this ‘opportunity’ before Gates, and allowed it to be shared among the entire world – from profitable businesses to individuals interested in nothing but owning the systems they had bought.

But then, I actually work in the software industry, though not for the world’s largest business software maker – though I am intimately familiar (in the mid-1990s in Walldorf, NDAs weren’t exacty commonplace) with the terms of that company’s arrangement to access Microsoft’s software. Which meant that this three letter company had to use Microsoft’s software in all cases where such software existed, regardless of its suitability, efficiency, or cost. To put it a bit differently – I assume everyone here knows that Libre Office was originally created in Germany, right?

And that Libre Office is till free, compared to whatever it is Microsoft is selling now?

jadrakiFebruary 1, 2013 at 10:47 am

@prior_approval

I’ve met and I partially respect Stallman. But I am not convinced that the counterfactual computing universe would have been drastically better under Stallman et al.’s strong ideology. There are/were tradeoffs to society for both ‘approaches’ that we can only imagine.

prior_approvalFebruary 1, 2013 at 10:55 am

‘But I am not convinced that the counterfactual computing universe would have been drastically better under Stallman et al.’s strong ideology.’

And yet, by posting this comment, you are proving that his vision was correct – again, without Linux/Apache/BSD/BIND, not to mention TCP/IP or HTTP, no one would be reading your comment.

dan1111February 1, 2013 at 11:04 am

@prior_approval – Stallman started the Gnu project in 1983, several years after Microsoft started selling DOS. It didn’t become a viable operating system until more than a decade later, when combined with the Linux kernel developed by others.

jadrakiFebruary 1, 2013 at 11:14 am

@prior_approval

That argument doesn’t demonstrate anything. Classic problem with counterfactuals. I am all for giving props for these things.

It assumes that the same, perfectly substitutable, or even superior options for throwing text at people anywhere on the planet, in real time, would never have been created. That only those individuals could do it and only in those technical ways and only through intensive proselytization of Free Software.

Moreover, sequencing is not causation (sorry Granger).

Something as good as C would exist whether there was Fortran only, Cobol only or 17 prominent languages prior. They were neither necessary nor sufficient conditions for C. Did C build on them? Yes. Did we get C faster? probably. Is C superior (in some ways) because it responded to their shortcomings as languages? Yes. But they are historical and attributable but not causal. Something like C would have inevitably been created.

If Linus T hadn’t hijacked the GNU Kernel would we have Ubuntu today? Most likely.

prior_approvalFebruary 1, 2013 at 11:35 am

‘Classic problem with counterfactuals’

I’m presenting the factual, not the counterfactual.

prior_approvalFebruary 1, 2013 at 11:40 am

‘Stallman started the Gnu project in 1983, several years after Microsoft started selling DOS.’

You mean IBM DOS?

Why yes, I am that old. And the successful attempt to create a monopoly started when Gates abandoned OS/2 (a joint project with IBM), instead focussing on Windows.

And never forget, Stallman never cared much about Microsoft – like most software professionals of that era, he considered their offerings to be equivalent to a toy to play with, at best.

jadrakiFebruary 1, 2013 at 11:45 am

‘Classic problem with counterfactuals’

I’m presenting the factual, not the counterfactual.

I have to belabor this. But as soon as you say “I wouldn’t be able to post comments today if …..”, you are describing a counterfactual and hypothesizing.

I am all for giving props to the folks who did stuff first and even very well. But to claim that we ‘wouldn’t be reading each others’ words today’ if those few, uniquely talented, brave, hyper moral souls had not existed is silly.

prior_approvalFebruary 1, 2013 at 1:35 pm

‘But as soon as you say “I wouldn’t be able to post comments today if …..”, you are describing a counterfactual and hypothesizing.’

No – I am describing the world we live in.

It is true that in an alternate reality, maybe something other than TCP/IP or BIND would be used for the Internet.

That is not the world we live in, though – and Prodigy, AOL et al. died a long time ago.

AlFebruary 1, 2013 at 5:06 pm

prior_approval, the counterfactual you presented is the “You wouldn’t…” bit.

CarelessFebruary 7, 2013 at 9:54 am

MAybe PA is serious and thinks that no one would ever have invented basic internet protocols if not for those couple of specific people. We already know he’s insane when he discusses certain other subjects.

john personnaFebruary 1, 2013 at 9:58 am

On this tangent, I do not think MS was a great innovator, but also there were many moving targets and even phantom destinations. A stable multitasking OS could have been delivered decades earlier (the first QNX was it, actually) but everyone was chasing snipes.

JWattsFebruary 1, 2013 at 10:41 am

“On this tangent, I do not think MS was a great innovator”

This reminds me of the quote:
“Democracy is the worst form of government except for all those others that have been tried.” – Winston Churchill

Windows is the worst Operating System except for all those others that have been tried.

prior_approvalFebruary 1, 2013 at 10:44 am

Hilarious – without Linux/BSD, none of us would be reading your comment.

john personnaFebruary 1, 2013 at 11:05 am

I can compartmentalize my praise for Gates. I think he’s a better human being than Jobs or Ellison. He certainly has dug into philanthropy with power and intelligence. It’s just that when he was running MS his goals were never mine. He wanted a powerful earning monopoly. He did not optimize for progress or innovation at all. (Perhaps you have to know too many background projects and early demonstrations to get that … but examples are as recent as the Java and C# fork. That schism was not about progress, it was about maintenance of monopoly.)

derekFebruary 1, 2013 at 11:18 am

Gates and co saw a natural monopoly and went for it. They were able to leverage their market position to maintain that almost total monopoly for many years at great profit. If someone came out with a good idea, they would throw together a first version, dry up funding and sales, then by v 3.0 would have something usable.

Then came the network, where your front door is open to the rest of the world. Remember the ‘I Love You’ virus? At the time there was no alternative for a desktop, so people put up with the instability and unsuitability of the Windows platform. If you want a bunch of networked machines connected to the internet to launch spam or other nefarious attacks, you target insecure Windows installations, there are millions.

The buggy v1.0 to freeze the market makes your machine a vector for stealing credit card numbers. The whole business strategy that got Microsoft where they were is not there any more. They are not a natural monopoly anymore. Good for everyone.

dan1111February 2, 2013 at 5:49 am

I use Windows and find it necessary to do so, but I don’t think it’s better than Linux variants. Its only real advantage is market share–everything “just works” on Windows because everybody has to make sure their software/technology works on Windows.

Indeed, you are really wasting your immense talents. Psychiatry is your true gift. Astonishing capability to be in a room with an individual and develop all those accurate insights immediately. You possess the gift of being able to deconstruct a most accomplished human being in a very short period of time. Not shaking hands is as telling as Donal Trump’s preference of not shaking hands.

Joking asides, it’s good to see/hear so much positive things have been achieved wrt under 5 years mortality and post-delivery mortality. OTOH, I do worry about the demographic and thus economic implications of these results. Saving little babies will always be easier than educating children and teenagers and then giving young men and women a good paying job and a future…

NyingesaFebruary 2, 2013 at 1:28 am

This has been one of my sneaking suspicions of the developmental Challenges I witnessed growing up in rural East Africa, The Government, along with the then nascent and now pandemic NGO-AID industry were heavily focused on Health care. Immunization and infant mortality campaigns drastically raised survival rates for rural villagers. I saw many 8-14 member families post Independence, and routinely encounter adults today emanating from those families, all struggling mightily to break out of poverty, requesting assistance to help them support 7-9 children, and I think “what the f*** were you thinking”. My point though is that population growth, began to crowd out economic growth be redistributing resources.

whatsthatFebruary 1, 2013 at 9:29 am

ha ha ha ha

Steven KopitsFebruary 1, 2013 at 8:16 am

It is, in fact, relatively trivial to instill and reap the rewards of better governance. We’re just not willing to do what it takes, nor willing to discuss the issue.

buddyglassFebruary 1, 2013 at 8:30 am

I’m willing. What would it take?

CliffFebruary 1, 2013 at 9:59 am

Taking over

Steven KopitsFebruary 1, 2013 at 10:19 am

Align the incentives. Pay for performance. I’ve said that before.

So, if you want to think about this topic over the weekend, here are a few questions to contemplate:

1. What is the objective function of government? We know that businesses maximize profits (or some version thereof). What does government maximize? (By the way, did you ever have that discussion in any econ class you ever took? I didn’t.)

2. What is the objective function of the politician? Is it only to get re-elected? Even if his pay is only, say, $1 per year? What might Adam Smith argue?

3. What is the politician’s agency? Whom does he represent? Those who elected him? His district? His state? The nation? His party? His poitical patrons? And in what time frame? Short run? Long run? Assuming he adopts his agency role (ie, faithfully acts on behalf of his constituents), does the politician have a single objective function, or multiple?

4. How would the presence of multiple objective functions–some of which conflict–affect the control of the principal over the agent? How might this manifest itself in the governance process? What problems might arise as a result?

5. Given the above, is agency adequately defined in the democratic process? Is there a missing link? What innovations would you suggest?

Brian DonohueFebruary 1, 2013 at 10:39 am

Good questions. I don’t think the answers are close to trivial though. Agency theory may be the right perspective, but governance is still a real challenge in large corporations, which presumably have a sharper focus and easier-to-measure success metrics than the government.

JWattsFebruary 1, 2013 at 10:44 am

I second the thought that those are good questions and with non-trivial answers.

This is the kind of post that makes this place a wonderful value for the time spent reading.

buddyglassFebruary 1, 2013 at 11:06 am

“Align the incentives. Pay for performance. I’ve said that before.”

Not being a regular reader of the MR comments section, I’m not familiar with your past postings. Could you elaborate? How should incentives be re-aligned? What performance metric should be used?

Also: how could “we”, with “we” being “wealthy nations looking to improve the situation in developing nations”, motivate these sorts of changes *from the outside*?

It’s one thing to say, “Here’s a better way to organize your government in order to cut down on corruption,” and another to make it actually happen.

Steven KopitsFebruary 1, 2013 at 2:41 pm

This is a longer topic, worthy of a book. (I have, in fact, a manuscript on the matter prompted by the changes I observed in Hungary as it transitioned from a socialist to a lukewarm capitalist system.) Let me here address the structure of incentive systems, rather than the objective functions associated with government.

Governance, for any given objective function, is a matter of managing principal-agent issues–that’s what we mean by aligning incentives. We want the agent to be motivated to act in accordance with the wishes of the principal. This doesn’t always work. For example, corruption, in principal-agent terms, is when an agent uses his power as agent to enrich himself (as principal). The government official accepting a bribe to approve a construction project is an example of such a principal-agent issue.

Consequently, the problem you’re trying to solve is this: How can I structure compensation to the bureaucrat such the he fulfills his agency role rather than abusing that role to enrich himself? Well, it turns out we have a good model: the private sector. In the private sector, employment is Pareto optimal, in the sense that both the employer and employee have the best alternative they could get. And pay is linked to performance (at some level). So both have an incentive to continue to work together–and this creates trust. Trust, is of course, the ex-ante belief that an employee swearing fealty to a given agency role (eg, store manager) will fulfill the obligations of such agency (ie, won’t steal from the till). Now, because the employer prefers the employee to all others and the employee wants the job, there is an incentive to create such trust, and this becomes a culture of trust over time. It wouldn’t even occur to most Americans to offer $10 to the clerk at the Gap to let them walk off with $100 of clothing. In a socialist culture (think Cuba), by constrast, this happens all the time. I’ve noticed that Hungarians who grew up under communism, when they are in the States, are not averse to offering a US state trooper a bribe to get off a speeding ticket. To me, that’s unimaginable. So Pareto optimal employment eliminates corruption and creates a culture of trust in which certain boundaries (stealing from the till) are never tested. (Notice that we are defining trust and culture in a very specific way.)

Now, the value which must be honored is not of the employee, but the value of the trust. So, you wouldn’t want a minimum wage guy handling tens of millions of dollars of uncut and untraceable diamonds, for example.

We’d like to translate this model to the public sector. To succeed, we need to set the level and structure of compensation such that the bureaucrat fulfills his agency role. Thus, the value of the compensation earned honestly must be at least the value earned through corruption adjusted for the risk of being caught and limited opportunities to spend ill-gotten gains. So that set’s the value.

And of course, pay must be linked to performance. You actually have to have goals, the achievement of which results in a payout.

Now, very very importantly, my experience in Hungary suggests that the incentives of any structure will depend ultimately on the incentives of the owners. State-owned enterprises are ultimately owned by the legislature. So it’s the incentives for the members of the legislature which will be decisive in setting incentives and expectations down the line. That’s where we want to start.

To incentivize politicians we therefore need three things:

– a performance target
– a measure of value sufficient to offset the temptation of various forms of corruption
– a compliance/enforcement mechanism

I think most economists would agree that the primary characteristic of good national governance is sustainable growth. By growth, we mean GDP growth, and 3% would be a nice number in the OECD; by sustainable, we mean limiting the growth of debt, and I might suggest 0% is a nice number. So I might offer Growth of GDP minus Growth of National Debt as the performance target, with a value of 3% (3% GDP growth – 0% growth in debt) being a good year and a value of 0% being a pretty bad year.

Now, how much do we have to pay to properly incentivize politicians? Here it’s important to keep in mind that not everyone in a legislature has access to bribery. In Hungary’s Parliament, I would guess the big takes are shared by something between 2 and 10 people for a given act of corruption. That means most legislators of the ruling party and all of the opposition party are excluded from meaty bribes. So we can focus on those away from the core bribes. In Hungary, a bonus of $300k would be appealing to most legislators; in the US, I would guess a bonus of $1-2 million would be attractive to a large number of Congressman and 25-40 members of the Senate. Do the math, and that gives you a coefficient of about 0.25% to apply to the performance target in the case of the US.

Thus, a bonus of 0.25% * (GDP growth – growth of Federal debt, both in dollars) / 535 members of Congress. Note that this applies to all members of Congress of all parties. This is how we do away with partisan bickering (the result of the ruling and opposition parties operating under differing incentive structures–we have to align these incentives as well!). The total cost of this program in a decent year, in the US, would be approximately $1 bn, or $10 per household.

Compliance: Now, we need a scorekeeper. Who determines what the performance numbers actually were? It could be an internal body like OMB, the Fed, GAO, BEA, Treasury, etc. On the other hand, maybe we want an external scorekeeper. Enter the IMF, a body well suited to just management of incentive programs. That’s where I’d put it. Indeed, if you think about it, Governance Compensation and Compliance would emerge as one of the key functions of the institution.

So that’s a sketch of an incentive system. There’s of course much more to it, but this should give you something to think about.

buddyglassFebruary 1, 2013 at 4:18 pm

“Consequently, the problem you’re trying to solve is this: How can I structure compensation to the bureaucrat such the he fulfills his agency role rather than abusing that role to enrich himself? ”

Not to be obtuse, but that’s not exactly the problem we’re trying to solve. It’s rather: “How can we *persuade the citizens of another country already mired in corruption* to structure compensation to the bureacrat such that he fulfills his agency role rather than abusing that role to enrich himself?”

It’s not so much “what is the right system” (although I’m sure there’s much fodder for debate on that as well), t’s “how do we install the right system *from afar* into a country whose government is currently ‘broken’.”

Steven KopitsFebruary 1, 2013 at 5:46 pm

Oh, that’s easy. You incorporate it into a debt restructuring or balance of payments support.

So, as part of the IMF package to Greece or Hungary, for example, you mandate an incentive to stay in place until the loans are repaid. This is really no different from a corporate loan convenant. Hence the role for the IMF.

If I were providing fiscal support to Greece, this would have been the very first condition I mandated. Good governance is the prize worth paying for in Greece, no?

Again, keep in mind, no one has implemented a plan like this yet. So you try it a few times on various IMF projects and see if it works.

NyongesaFebruary 2, 2013 at 1:39 am

As the Taliban have so aptly demonstrated, the human instinct to resist domination by outside groups, however benevolent, and yes, I sincerely believe the best possible thing that could ever happen to Afghanistan would be complete colonization by U.S. imperial power for at least two generations. Never-the-less, a deeper instinct towards defiance prevails as a core human value, for which Americans circa about 1775 would relate to. There a many such equivalent groups in Africa, to the Taliban, that is deeply tribal, deeply local, with little to no real grasp of the outside world and the many shared global values. Many of these guys are heavily armed, and many don’t consider themselves part of any “country”. Good luck with taking over them. Talking of which, Who’s up for taking over Haiti to improve governance?

Unlike Gates, I am not convinced that “health” is the key breakthrough area for economic development, but there is enough low-hanging fruit out there that it doesn’t have to be.

Why not? You get a huge bang for the buck out of things like clean water, personal hygiene, sewage/waste disposal, folic acid for pregnant women, iodine, and vitamin D-fortified bread. First things first.

ClaudiaFebruary 1, 2013 at 9:10 am

And according to Dana’s report Gates argued: “If you don’t invest in health there, you’re a cold-hearted bastard.” And yet, resources are finite. Investments in health may be central for humanitarian (help others) programs but may not be the main thrust of a development (empower them to help themselves) program. One upside of an episodic health condition is I now totally understand that reasonably good health is a necessary though not sufficient condition for being productive (and not destructive). But once you get the bang from the buck out of clean water, hygiene, etc…then what? And what’s the incentive to carry on a healthy lifestyle if you can’t make enough money to feed and support yourself? I suspect there are some places in the world where health is the primary need by a wide margin, but I doubt that sole focus extends to large areas. Over emphasis on one area leads to over-investment and creates blind spots. This was a very interesting post and the linked material too.

Andrew'February 1, 2013 at 9:22 am

However, we, the richest country in the universe- rich rich rich! (filthy-stinking rich we are) still have vitamin D deficiencies and who knows what else that may have implications to IQ. It might be summarized that until we have our best selves there remains low-hanging fruit.

Ask me that question when we get the bang from the buck. Thousands of clueless foreigners running around Haiti still haven’t taught them how to construct, maintain and place latrine ditches. Or just built them a sewage treatement plant. It’s kind of hard to ponder increasing GDP or wand-waving “institutions” when you’re always having to run to the hospital with cholera or dysentery. I can understand your bias though. Things like giving people shoes so they don’t get hookworm or draining stagnant ponds of water are boring compared to macro-economic policy.

There’s an old saying: teach a man not to shit in his drinking water, then you can teach him to be an ichtyologist.

ClaudiaFebruary 1, 2013 at 1:36 pm

“I can understand your bias though. Things like giving people shoes so they don’t get hookworm or draining stagnant ponds of water are boring compared to macro-economic policy.” As a bipolar macro forecaster over the past five years who does applied micro research on household behavior … I LOVE boring when it exists. I am just saying good health is not a sufficient condition for a productive, meaningful life. At the end of the day, individuals have to themselves see the value of/benefit from many human capital investments including health, education, or social networks for the infusions of development aid to have a lasting impact. I appreciate the mundane, but I am skeptical of silver bullets.

Andrew'February 1, 2013 at 9:14 am

All else being equal, someone else’s increase in health takes little that I can think of away from me. In fact, it puts money in my pocket to the extent medical service financing is socialized, lowers costs, and makes that person more available to the productive economy. Sick people don’t not use resources. And sick people are probably disease vectors. So, it seems like for health not to be an economic panacea there would have to be better alternatives. One thing I could think of to consider would be Permaculture, if that works.

sourcreamusFebruary 1, 2013 at 12:36 pm

It seems to me that he is saying that economic development drives good health outcomes more than the reverse. Thus if you can invest in something that speeds economic development good health will be a side effect but that if you invest in something that improves health outcomes it may not speed economic development.

UrsoFebruary 1, 2013 at 1:59 pm

Aren’t healthy workers more productive than unhealthy workers, almost tautologically? Even for children, who aren’t “workers” in the traditional sense, can do more minor chores (and take up less of their parents’ resources) when healthy. Farther down the line, improved health by kids leads to improved educational outcomes, leading to even higher productivity.

Improving health also seems uniquely well suited to a non-profit because there are no crowding out or moral hazard issues (that I can see at least).

RahulFebruary 1, 2013 at 8:38 am

“I am not convinced that “health” is the key breakthrough area for economic development”

Define “key”?

derekFebruary 1, 2013 at 10:56 am

Not too long ago I was reading about some remote area in Afghanistan with very low childhood survival rates. Someone asked the locals what if we could help? They looked blankly back and asked, What would we feed them?

Maybe in a different frame of reference, a large cohort of healthy 12-14 year old boys is simply an army to be raised to impose a will.

I suspect that health and many of the other things that we take for granted are the results of prosperity rather than a driver of it. Prosperity comes from many other sources that are far more complicated to set up than handing out rehydration salts.

carelessFebruary 7, 2013 at 10:42 am

The rather obvious solution is “contraceptives”

RyanFebruary 1, 2013 at 12:42 pm

I know sometimes Tyler is purposefully vague, but I’m struggling with his comment here as well. Fundamentally, without health, what do you really have? If each and every day your focus is survival, how can you concentrate your capital — human or otherwise — on items to progress your economy.

What does “key” mean here?: I took it as “most important”. What else is there?

prior_approvalFebruary 1, 2013 at 8:44 am

‘Gates and hear him present his new letter’

Is this like the patented windows key on keyboards? Because the one thing Gates really understands is how monopoly is profitable – making him a truly fitting successor to Rockefeller.

Though Rockefeller never faced Stallman – in the end, the better man did win the most crucial battle of our generation. (Cowen, Gates, Stallman, and I are the same generation – and why yes, I did learn Fortran programming in a FCPS high school in the mid-70s. The IBM punch card readers in the typing classroom were no longer used, though – we accessed a HP3000 system, if I remember correctly, from a terminal.)

Why yes, this comment is being posted from a solar powered (generally – the last two weeks have been quite cloudy – only the speakers and router are currently solar powered) laptop/router running Linux. (And yes, I did use that Bush tax gift to buy a solar battery regulator, made in the U.S. to boot – free money from a Republican is a fine gift to use to upgrade one’s energy independence.)

CliffFebruary 1, 2013 at 10:01 am

If only the money came from George Bush

prior_approvalFebruary 1, 2013 at 10:33 am

No Cliff, it came from you and pretty much everyone else posting here. Thanks, by the way.

CliffFebruary 1, 2013 at 11:20 am

And I thank you for your cash for clunkers donation to my coffers, which I used to purchase a gas-guzzling SUV.

prior_approvalFebruary 1, 2013 at 11:43 am

Well, I don’t pay American taxes, and haven’t for decades. And the German cash for clunkers program was much better designed. Nonetheless, the check was able to find me – much to the utter bemusement of my German neighbors and friends.

But again, thanks for the solar battery regulator – it has been well worth it, and made in America to boot.

Brian DonohueFebruary 1, 2013 at 11:44 am

If p_a is in Germany, he wouldn’t have paid for that. Instead, he can feel good about sun-drenched Germany spending $18 billion per year to supply 3% of its electricity needs via solar power.

For us, the planet is a smidgen cleaner. Thanks Germany!

prior_approvalFebruary 1, 2013 at 1:45 pm

‘Instead, he can feel good about sun-drenched Germany spending $18 billion per year to supply 3% of its electricity needs via solar power.

For us, the planet is a smidgen cleaner. Thanks Germany!’

Not only that – after shutting down 8 nuclear plants, Germany still exported more electricity than it imported, as reported on the news just a couple of days ago – at least according to the latest, stringently audited, report, since people here had a problem believing that fact the first time the statistics were reported.

But hey, it isn’t as if Germans know anything about technology, right? And perhaps you might want to look at the market for German solar modules using advanced technology – there is also a reason why Germany is a succesful exporter of industrial goods, too. Maybe you also have a figure about how much money Germany wasted on windpower? Or how much power Germany generates from wind?

Because your numbers seem to be a bit out of date –

‘During the first half of 2012, the share of renewable energy sources in the electricity supply has risen significantly in Germany, rising to a sensational 25.97%. That’s a massive increase compared to 20.56%, the percentage during the same period in 2011, and 18.3% in H1 2010.
PV-Solar Contribution Increases 47%

In total, renewable energy sources produced 67.9 TWh (billion kWh). While all renewables have increased their share, there has been a significant change in the ranking of the different technologies, with PV-Solar(!) coming in 3rd, ahead of hydropower and right behind biomass (1% behind it).

Here’s a breakdown of the 26% between the different technologies and the changes compared to 1H 2011:

1. Wind power with a share of 9.2% (+19.5%)
2. Biomass with a share of 5.7% (+7.5%)
3. PV-Solar with a share of 5.3% (+47%)
4. Hydropower with 4.0% (+25%)
5. Other Renewables 0.9% (+10%)

Of course, a part of the massive increase has been weather-related. For example, January was very windy compared to the last few years, and a bit more rain is the only reason hydropower increased its share. But, overall, the trend is clear, and all of these sources are here to stay.’

As far as I know, the $18 billion price tag relates just to the solar power. I’m guessing all that other stuff ain’t free either.

Of course, Germany shrewdly presented itself to the world as a country of lunatics bent on world domination to the point where the world is agreed that maybe Germany shouldn’t spend money on its military, freeing up resources for all manner of inefficient spending. Germany- a shining example to the world!

prior_approvalFebruary 1, 2013 at 2:39 pm

‘Germany- a shining example to the world!’

Well, the Chinese, the Japanese, the Brasilians, the Canadians, the Russians … the list goes on actually … seem to think so. Especially when it comes to buying what the Germans sell – things like very efficient energy systems, or maglev trains, or various industrial tools.

Or even modern mass transit systems. Except in the U.S. – there, Siemens had to train its workers in California how weld steel over meters of length, using outdated streetcar designs. Mainly because those decades old steel models shrug off a typical accident involving a typical American driver behind the wheel of a typical American vehicle. The rest of the world makes do with hi tech low floor, composite and glass models.

The article is a bit old, and has more than a touch of smugness concerning just how exceptional the U.S. is –

Hauck knows what he’s talking about. He runs German engineering giant Siemens’ streetcar manufacturing plant in Sacramento. But when the German company showed up in the California capital more than two years ago with its plans to build trams there, it found little evidence of craft or even skill. Hauck couldn’t find a single welder with the right skills for the job anywhere in the region.

Making meter-long welds across thin sheet metal without the car “bending like a banana,” says Hauck, takes talent and sensitivity. More important, it takes good training. To provide that training, Siemens flew 50 welders from its Munich locomotive plant to California, where they spent six months retraining local welders. Now the Sacramento plant is up and running.’

It even provides a bit of insight into how German companies make good money providing goods that less developed countries are unable to provide on their own.

JWattsFebruary 1, 2013 at 4:21 pm

“Not only that – after shutting down 8 nuclear plants, Germany still exported more electricity than it imported, as reported on the news just a couple of days ago – at least according to the latest, stringently audited, report, since people here had a problem believing that fact the first time the statistics were reported.”

According to this you are wrong:
“Since nuclear power generates almost a third of the electricity in Germany, many thought that the country would have to import energy as the nuclear phase-out progressed. At first, Germany was still selling more electricity than it bought, due to its renewable energy industry.

This, however already changed in the autumn, with Germany beginning to import energy from its neighbors. In certain cases, the country was actually buying electricity, generated in nuclear powerplants close to the German border.”

Their spending on solar power certainly seems to be an enormous waste of money. Huge costs for trivial benefits, including a negligible reduction in carbon emissions.

Ray LopezFebruary 1, 2013 at 8:54 am

Quail food for thought: Africa historically has had a LOW population–all of Africa, which is 3x bigger than Europe in area, has had a much smaller population historically (before the 1800s); probably 10x smaller, maybe more, though estimates are hard to come by. Can it be the carrying capacity of Africa, like Australia, is small? Maybe Africa cannot support 1B people? Against this, the area of North America was large and populations small prior to the arrival of European settlers, and then that changed. However, one can argue that N. American soils are more fertile than Africa’s bleached out soils. Against even this argument, one could argue that with cities, no need to have fertile land, since food can be imported from breadbaskets all over the world. Food for thought (that Bill Gate is wasting his money).

TherapsidFebruary 1, 2013 at 9:07 am

However, Sub-Saharan birthrates are declining. The average fertility rate for black Africa is just under 5. Still very high by world standards, but it was closer to seven in 1980. And the rate of decline has become steeper over time.

RoyFebruary 1, 2013 at 9:07 am

This is the single biggest argument for Diamond’s “Guns, Germs, and Steel” argument. Historic carrying capacity is irrelevant once you introduce new crops and technologies. North America has a much higher carrying capacity witg wheat, non human traction, etc… So does Africa with New World crops and tropical medicine. It goes both ways too, Amazonia lost human carrying capacity with the introduction of tropical diseases.

Africa has a lot higher population than it did before, but then so does China.

Ray LopezFebruary 1, 2013 at 9:25 am

I agree with everything you said except the last part: China has always had a big population. The reason? Rice. I think it’s more calories per mass than wheat, and regardless, it’s why populations in ancient (south) China were so big. Off-topic: why is Australia so desolate? Their anti-immigrant policy? After all, they can import all the people and food they need from China, no?

RoyFebruary 1, 2013 at 10:49 am

Chinese demographic history is really misunderstood, until the late Ming, China’s population was just bumping along at 100 million, it had been stable around there since the early middle ages. It was the introduction of New World crops in the 18th century that sent Chinese population to the half billion mark in the 20th century. Yes China has always had a lot of people, but not very long ago it had a lot less.

Mark ThorsonFebruary 1, 2013 at 11:15 pm

The massive renovation of the Grand Canal during the Ming Dynasty may have been the key factor in the population taking off. Of all of the ancient public works projects in the world, the Grand Canal has probably yielded the biggest return on investment by a very large margin.

Anonymous cowardFebruary 1, 2013 at 9:02 am

7. He’s dogfooding.

Andrew'February 1, 2013 at 9:06 am

6. Why on earth would he be concerned about AP credits. Did you tell him to call Peter Thiel?

derekFebruary 1, 2013 at 10:51 am

It’s like two big muscle bound guys arguing about who has the biggest, and a short bald guy with 4 kids walks by.

They might both have mild Asperger’s. That’s not a mean joke, by the way.

Andrew'February 1, 2013 at 12:34 pm

Okay, but maybe non-aspergers should have to justify spreading germs. What is so wonderful about pressing the flesh? Is it just that non-aspies simply receive pleasure from not questioning social traditions?

Yeah the handshaking comment is a little weird and seems out of place in this post.

john personnaFebruary 1, 2013 at 10:03 am

#12, one sad confusion is that teachers will always measure themselves on compassion, while outsiders will measure them on teaching. Not every deeply committed and compassionate teacher can be effective in the classroom. What to do then? (Conversely, the mean, Germanic, algebra teacher may be what you need.)

Andrew'February 1, 2013 at 10:10 am

This is why I think it is ‘let parents decide’ in some form and then let whatever emerge. For my kid, I’d take compassion over rigor any day for a long time- perhaps until middle school.

john personnaFebruary 1, 2013 at 10:21 am

I agree that there should be a transition, apace with child development.

TerriFebruary 1, 2013 at 11:59 am

The problem with “perhaps until middle school” is that certain subjects — math, most obviously — are cumulative. If you have a warm and fuzzy teacher using a horrifically crappy curriculum (like, say, Everyday Math), you will be totally screwed by the time you get to middle school. Some students will be able to catch up, but many will not.

Andrew'February 1, 2013 at 12:36 pm

This is part of my thing. Schools seem to do very little properly. They don’t teach second languages or math at the right times, meaning that when they do teach them it is largely wasted effort. So, if they are going to do everything wrong, I’d rather they not did it with gusto and high guilt. My kid will have no trouble with anything as long as he is not trained to hate school (as I was). If they were to do everything right with personality-tailored compassion then coo.

JWattsFebruary 1, 2013 at 10:57 am

” Not every deeply committed and compassionate teacher can be effective in the classroom. ”

I’m not worried about that group. It’s fairly small and honestly I had a couple of teachers like that and they were still what I would consider good teachers. Their enthusiasm made me interested in all kinds of things (and they were generally off-topic), so I learned a lot, though maybe it wasn’t about the subject at hand.

I’m worried about the apathetic, just trying to make it to 3:30 pm teacher. The kind of teacher that immediately tells you to open your textbook to Chapter 3 and start reading. And then you have your standard end of chapter quiz after 40 minutes, that is graded by passing it to the student behind you.

john personnaFebruary 1, 2013 at 11:38 am

There was a suicide out here in California, of a compassionate teacher who could not help his students score on tests. There was a lot of handwaving, but one possibility was that he was in fact a very dedicated and compassionate bad teacher. Where there’s one, there are others …

Andrew'February 1, 2013 at 12:03 pm

Basically, all I care about is bullying. I don’t need any of their bullshit, but I do need them not to muck up.

Mackerel doesn’t seem like the type of fish that would lend itself to being in ceviche. Too oily.

ChrisFebruary 1, 2013 at 11:34 am

Gotta be weird to know that someone earned $1000 in the time it took them to shake your hand…

RahulFebruary 1, 2013 at 1:48 pm

This post was a wee bit too deferential and cloyingly sweet. Is Tyler angling for a grant?

HattipFebruary 1, 2013 at 11:44 am

It is absurd to imagine that “economic development” occurs, or is meaningfully aided by, the actions, programs or policies of non-economic actors, organizations, NGOs, charities, foundations, and/or government “commissions”. These organizations do nothing but give a forum for “moral vanity”, political posturing, and social, political and economic corruption and opportunism. It all is wholly self-serving and a complete waste of time for all but the immediate elite participants, and it is only their social, poltical and economics sphere that will be “developed”.

All of these attempts more or less function as vehicles for the rich to conveniently funnel money to their progeny while at the same time end-running taxes–with the added benefits that they get to buy off the nomenklatura of the institutional Left and payoff the corrupt in the “economies” they claim to wish to “develop”, and thus opening markets to their goods and services.

It is instructive to see Gates transition from a hard working businessman and technologist to a icon of the Institutional Left. The turning point was being dragged before the US Congress ove those bogus “charges” around his internet browser, charges brought by “lawmakers” in the pocket of his competitors. One gathers that he was not political in even the slightest way prior to that moment. For the knowing eye watching those “hearings” it is hard forget the shocked look on his face when he realized that it was all an immoral protection racket–a complete scam. One can see that he decided right then and there not to make the same mistake again. He will pay them off–thereby keeping them at bay–by creating his own “protection racket”: a foundation. He will become a Democrat. This is what the rich have been doing since the New Deal.

There is really only one way to have “economic development”, and that is to have economies naturally “develop” themselves. That would mean that they would actually earn their way by adding value in the grubby, work-a-day realm of business and trade. There is no “Charity”; there is no “policy”; there is no other “Key”. The idea that governments or “foundations” can somehow develop economies is absurd on the face of it. All these organization do is afford the trusties and the mob of non-profit employees the appearance of actually doing something productive. But the whole lot of them are, one way or the other, parasites. They can no more “develop” an “economy” than a welfare recipient or a gangster can do so.

If you want to develop economies in the 3rd world open up a viable factory or enter a viable market for a commodity. If you cannot do that, get out of the way of those who can do such things. It is called Capitalism. “Health” as the “key”? What hogwash. Try showing up to work on to earn a buck for your family. All else will follow. It is amazing how far the Left gets from the realities of life in their bizarre and effete abstractions and sloganeering.

But beyond it all, if Gates wanted to “help” someone, and could find a way to do so, then he would be better served to help his own countrymen rather than go gallivanting around the world and “helping’ other nations and peoples. He might start by not outsourcing American jobs. He can do none of this, of course, because he does not want to lose his credentials in the Institutional Left’s Nomenklatura.

His is the typical response of a technocrat and apparat. The “facts” that you think he “commands”, and his “understandings” you imagine that he holds with such depth and acuity are little more than shibboleths, gossip and bromides. They are not actually meaningful at all, and acting upon them, even if that were the intent, will not accomplish what he (and you) insists they will. All this “information” amounts to nothing more than Leftist elites chatting with themselves. It is just one more replay of the Left’s self-congratulatory parody of “The White Man’s Burden”. The level of racism, condescension and superciliousness in the whole glib face should give the wise and decent pause.

If he really had the understanding he (and you) imagines he has , then he would be opening profitable business yonder, and in areas that he understood from his days as a CEO of a major firm. The fact that he does not may actually mean that Gates may just understand all too well what is really going on, even if you do not.

Dan WeberFebruary 1, 2013 at 12:59 pm

Or maybe he just wants to wipe out polio.

NyongesaFebruary 2, 2013 at 1:46 am

+ 1

AFebruary 2, 2013 at 2:38 am

Indeed. A shallow knowledge of economics, combined with a lack of intellectual curiosity, and an addiction to indignation, will tend to produce nonsensical screeds like the above example.

No, it’s a good rant. The economic incentives of “aid” and frankly most charity are pretty bad. Of course, supposed steely-eyed, rational economists tend to go all squishy when the talk turns to certain topics.

IIRC, Gates just spent billion dollars on some sort of education initiative in the US which he admitted was a bust. So now he’s bored and wants to be the Great Father to the dark-skinned peoples overseas. Unlike Tyler, I’m encouraged he’s thinking about health instead of macro-economic meddling or some pie-in-the-sky scheme to buy computers for people who really just need shoes and potable water..

ClaudioFebruary 1, 2013 at 11:47 am

People tend to have their priorities pretty messed up. This guy is spending his vast fortune trying to eliminate malaria and other miseries of the poor and people still judge him because of Windows, prompt command symbols and being rich. Wake up you guys.

RahulFebruary 1, 2013 at 1:46 pm

It’s perfectly ok to love Gates the Philanthropist and hate Gates the businessman.

maguroFebruary 1, 2013 at 8:36 pm

Or vice versa.

Andrew'February 4, 2013 at 12:29 pm

Was trying to think of an elegant way to say that. I didn’t think of “vice versa.”

albert magnusFebruary 1, 2013 at 5:13 pm

I was 12 and I just thought it was cool that he remembered in such detail.

RahulFebruary 1, 2013 at 10:17 pm

What was his answer?

albert magnusFebruary 2, 2013 at 10:55 am

They had really tight memory constraints in those days. They had to fit the whole operating system into something like 32 K.

Greg RansomFebruary 1, 2013 at 12:26 pm

Is Gates doing anything about the human horror which is North Korea, the very poster child of a nation with development pathologies.

PaulFebruary 1, 2013 at 1:35 pm

Not shaking hands when introduced to members of his own small invited group and no ice sounds more like a king putting subjects (favored ones to be sure) in their proper place than about efficiency or health. I seriously doubt his time is more valuable than that of the President of the United States.

gandhiFebruary 1, 2013 at 11:47 pm

The namaste should be adopted more widely in the West, for when one person needs to greet a group. I prefer the Thai version.

nathan wFebruary 2, 2013 at 10:17 am

It hardly makes sense to go to uni if you don’t live past 40, and you need decent health to live past 40.

If you want skilled people who have a long enough life to build businesses and become highly productive workers who can pass on their skills to the future, you need good health across a population

AlvinFebruary 2, 2013 at 6:40 pm

The no cookie approach makes sense. It’s harder to have a conversation with people who have food in their mouths. He could have at least provided coffee though.

But I don’t know how anyone can drink water out of a glass without ice. Gates should know better.

Three other pieces of advice. Never travel on an empty stomach, never take a bath on a full stomach, and always have bread with your meal.

As per studies, protein is found to be as an essential compound for improving the height of a person.
The study also found that Americans spend a significant amount
of money on alternative therapies–$13. The rectum is the last stop of the digestive process.